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End of the news ForexLive Asia FX: Australian inflation intensifies

Forex news for trading in Asia Wednesday, October 27, 2021

The focus of the session was the release of Australian inflation data. Official inflation data for Australia is only released four times a year and today we have the CPI for the July to September quarter:

  • the title arrived as expected,
  • However, core CPI (core inflation) measures turned warmer, above expectations and within the RBA target band for the first time since 2016 (see bullets above).

The market response has been swift, with Australia’s three-year bond yield hitting its highest level since January 2020 and the Australian dollar marking higher. AUD / USD traded briefly at around 0.7535 and has since followed a small retracement and sideways. The result of core inflation has helped fuel a slow-burning expectation that the RBA will raise its cash rate well ahead of its oft-repeated prediction not to do so until 2024 at the earliest. Interest rate markets are now forecasting a hike in about 12 months with more to follow.

Other data released today showed a record trade deficit for New Zealand and improving profits for industrial companies in China. ANZ in New Zealand also released the results of its October business survey, noting inflationary pressures in the country are skyrocketing (see bullets above).

In China today, coal has fallen again. Commodity futures in China pretty much in all areas are more flexible.

Outside of the AUD, the exchange rates were quite moderate. The EUR and GBP are slightly higher against the USD while the dollar is slightly higher against the yen and CAD. After falling overnight and an odd 50% retracement, gold slipped a few dollars during the session here. It is still above its lows in the United States. BTC / USD is also down on the session here.

The AUD noted above when releasing the CPI data:


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